After a revised Aug. 18 proposal to purchase Syngenta, Monsanto said Wednesday it will end pursuit of the revised deal to focus on its standalone growth plan.
Monsanto said in a statement that it continues to believe a Syngenta merger would create value for shareholders, but the Aug. 18 proposal "did not meet Syngenta's financial expectations."
"Without a basis for constructive engagement from Syngenta, Monsanto will continue to focus on its growth opportunities built on its existing core business to deliver the next wave of transformational solutions for agriculture," the statement said.
Last week's enhanced proposal from Monsanto to Syngenta included:
• An increase of the cash component of the proposed transaction to CHF 245 per share. The proposal also maintained the same number of shares as in its April proposal, providing Syngenta shareowners with an approximate 30% ownership in the new company. Based on Monsanto's share price and currency exchange rates at the time, the revised proposal translated to a value of CHF 470 per share.
• An increase of the reverse break-up fee to $3 billion, given the confidence the transaction would close and to provide additional protection from closing risk. The reverse break-up fee would have been payable by Monsanto if it would have been unable to obtain necessary global regulatory approvals.
The shareowners of the combined company would have benefited from "substantial synergies, significant cash EPS accretion and attractive ROIC, as well as a responsible capital structure," Monsanto said.
While Syngenta confirmed Monsanto's offer, the company said Wednesday that it "significantly undervalued the company and was fraught with execution risk."
Syngenta also said that certain key issues were not addressed by Monsanto in sufficient detail to allow the company to make a proper assessment of the proposed new entity, which would have been 30% owned by Syngenta shareholders.
Monsanto didn't provide enough clarity on four things in its proposal, Syngenta said:
1. Their estimate of total cost and revenue synergies
2. Their assumptions regarding net sales proceeds of seeds and traits
3. The nature and extent of regulatory covenants that they were prepared to offer
4. The assessment of risks and benefits from a tax inversion to the United Kingdom
Despite the company's concerns, Syngenta chairman Michel Demaré said in a statement that it has "taken note" of Monsanto's decision not to continue pursuing a merger, and the negotiations with Monsanto were "in good faith."
"Our Board is confident that Syngenta's long-term prospects remain very attractive with a leading portfolio and a promising pipeline of new products and technologies. We are committed to accelerate shareholder value creation," he said.
Monsanto said it will continue its focus on opportunities within its existing core business and resume the implementation of its approved share repurchase program as soon as practical.
Monsanto leadership also confirmed Wednesday its confidence in delivering its five-year plan to more than double fiscal-year 2014 ongoing earnings per share by 2019.
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This story was updated with Syngenta comment, 1:15 p.m. CT, Aug. 26.